According to Matrixport, Ethereum's (ETH) recent rise is at risk of liquidation of leveraged positions because it is not based on fundamental support.

Ethereum (ETH), one of the significant players in the cryptocurrency market, experienced a rapid price increase last week due to speculative leveraged trading. However, Matrixport analysts emphasized that this situation does not stem from organic demand, and therefore, the price increase is not sustainable.

Following the airstrike on nuclear facilities in Iran by the U.S. last Saturday, the price of ETH experienced a sharp decline of over 8%. This situation clearly highlighted Ethereum's sensitivity to geopolitical developments and the risks stemming from leveraged positions.

Currently trading at around $2,248, Ethereum has significantly distanced itself from last week's peak of $2,400. According to Matrixport, the still high leverage ratio in the market could create additional downward pressure on prices.

Traders are avoiding risk

Data from cryptocurrency options markets also shows that Ethereum investors are turning to options contracts to protect against further declines. According to CoinDesk analyst Omkar Godbole, the 25-delta risk reversal rates for ETH in the options market have shown a negative trend in June and July. This situation reveals that traders are willing to pay extra costs to take precautions against a potential decline in Ethereum.

Additionally, QCP Capital stated in its latest market assessment that the risk reversal rates for both Bitcoin (BTC) and Ethereum are in favor of downside protection, and long-term investors are safeguarding their positions in the spot market.